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NATIONAL CONSUMER DISPUTES
REDRESSAL COMMISSION, NEW DELHI
Hon’ble Mr. Justice M.B. Shah, President &
Dr. P.D. Shenoy, Member
BHARAT ENTERPRISES—Complaint
versus
NATIONAL INSURANCE CO. LTD. & ORS.—Opposite Parties
Original Petition No. 141 of 1998—Decided on 25.7.2005
Counsel for the Parties :
For the Complainant :Mr. S.M. Tripathi, Advocate.
For the Opposite Parties :Mr. Sunil Kapoor, Advocate.
The court emphasized the importance of accurately assessing the salvage value and the obligation of the insurance company to handle claims promptly and fairly.
Headnote:
Salvage Value - Assessment of Loss - Fire Insurance Policy - [Section 4, Section 5, Section 12 of the Consumer Protection Act, 1986] - The court analyzed the assessment of salvage value of leather goods affected by fire and water, the conduct of the insurance company, and the discrepancy in the reports of the two surveyors. The court emphasized the deficiency in service by the insurance company and directed payment of the assessed loss with interest, imposing costs on the insurance company.
Fact of the Case:
This case involves a manufacturer and exporter of leather garments who suffered loss due to an accidental fire. The dispute revolves around the assessment of the salvage value of the affected leather goods after the fire was extinguished.
Finding of the Court:
The court found that the first surveyor correctly assessed the loss, while the insurance company handled the case in a lackadaisical manner. The court directed the insurance company to pay the assessed loss with interest and imposed costs on the insurance company.
Issues: The main issue was the determination of the salvage value, with the complainant seeking payment for the assessed loss, interest, and compensation for non-settlement of the claim.
Ratio Decidendi: The court emphasized the deficiency in service by the insurance company, the discrepancy in the reports of the two surveyors, and the lack of justification for the insurance company's stand.
Final Decision: The court ordered the insurance company to pay the assessed loss with interest and imposed costs on the insurance company.
Dr. P.D. Shenoy, Member—This is a case of loss which occurred to a manufacturer and exporter of leather garments due to an accidental fire. The dispute falls in a narrow compass, pertaining to the assessment of the value of the salvage i.e. the leather goods affected by fire and water, after the accidental fire was doused by the fire force.
Facts of the case:
2. The facts of the case, in brief, are as follows:
The complainant, M/s. Bharat Enterprises is engaged in the manufacturing and export of leather garments with factory at Okhla Industrial Area and godown for storage of finished/dressed leather at Karol Bagh, New Delhi. The Complainant had obtained a Fire Insurance Policy for a sum of Rs. 90 lakh for the period 21.3.1997 to 20.3.1998. On 27.4.1997, fire was caused by an electrical short circuit at their godown and the fire brigade controlled the fire after more than two hours. The fire and water used in extinguishment of fire damaged the stock of finished/dressed leather in the godown. The complainant had also informed the police station and sent a letter pertaining to the fire accident. The insurer was also informed of the accident.
3. The National Insurance company had appointed M/s. Bhadra & Associates Pvt. Ltd. for survey and assessment of the loss. The surveyors had advised them not to dispose of the salvage without their permission. The complainant had also submitted complete claims form to the Surveyors claiming a sum of Rs. 33,48,662.35 after deducting probable value of salvage. The Surveyor after sometime gave permission for disposal of the damaged stock/salvage which was sold by the complainant for a sum of Rs. 9,02,455. As there was delay in the settlement of the claim, the complainants reminded the insurance company to settle the claim through reminders in the months of July, August, October and November, 1997. The Insurance Company appointed another Surveyor i.e. M/s. Adarsh Associates. The second urveyor re-looked into the whole matter and came to the conclusion that the salvage value assessed by the complainant is very low. The second Surveyor held that the amount payable is Rs. 9,03,922 after deducting the value of the salvage as assessed by him namely Rs. 22,83,246.
The Issue:
4. The issue for decision is whether salvage value should be taken at Rs. 9.5 lakh or at Rs. 22,83,246 as assessed by the second Surveyor.
Submissions of the learned Counsel for the Complainant:
5. Learned Counsel for the complainant submitted that the main issue to be determined is that of the value of the salvage. He pointed out the fire claim form submitted by M/s. Bharat Enterprises to support his contention which is reproduced as under:
Articles destroyed or Damaged
Value or property or articles damaged or destroyed at the time of the fire
Value of salvage
Amount claimed i.e. actual loss or deduction of salvage value
(in Rupees)
Finished/Dressed damageddue to fire
4,65,735.35
15,000.00
4.50,735.35
Finished/Dressed damaged due to watrer
34,39,400
5,41,473.00
28,97,927.00
33,48,662.35
6. On 21.5.1997, M/s., Bharat Enterprises wrote a letter to M/s. Bhadra and Associates Pvt. Ltd. The extracts of the letter is reproduced below:
“ We bring to your kind notice that the damaged stock is fast deteriorating its originally (sic) and strength day-by-day. If you will find that our quotation is higher than their quotation which you have received. Kindly let us give(sic) permission whether we shift the damaged stock for refinishing or sale or not. If our quotation does (sic) not suitable than (sic) you can sell the salvage to some other parties or you can arrange to shift the salvage somewhere. This is for your immediate action.”
7. The Surveyor has replied in the following words:
“ This refers to salvage inspected by us at your godown relating to damage by fire and water on 27th April. You are allowed without any prejudice to dispose of the salvage on your own account as per your suitability.”
8. Accordingly, M/s. Bharat Enterprises sold the goods for
